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The Board’s Agenda: The Role of The Board in an Age of Exponential Change

Powerful technologies—from quantum computing to additive manufacturing, synthetic biology to blockchain and bitcoin—are generating disruption across industries, changing fundamental aspects of how businesses operate. And while some organizations are starting to harness these and other innovations, doing so may require a relentless focus on engagement with nontraditional business partners, bold thinking, discipline and a commitment to reshaping business as usual.

John Hagel

In this time of exponential change, board members have a special role to play in guiding transformation, challenging the basic assumptions of an organization and helping to foster a positive culture of exploration and experimentation to help keep the business evolving as its environment changes.

But how can board members know whether their company is ready for exponential change?Asking the following questions can help in assessing management’s understanding of the environment and what can be done to help the company thrive amid rapid change.

How are we responding to new technologies or business models affecting our industry? Are we keeping up with the pace of change? How are our competitors responding?

Are there new players entering our space from what have traditionally been seen as other industries? What are they doing differently?

What is the most common attitude toward change among employees? Are some departments or divisions more resistant or welcoming than others?

Where does management see the business in 10 to 20 years? What would our company need to look like to succeed in that future? What can we do on a small scale, from within the business, to test movement toward that vision?

What new initiatives are happening within the company, and which have the potential to scale significantly in new areas? What two or three business initiatives will best accelerate movement toward that future within the next six to 12 months?

Do we have the critical mass of resources needed to pursue such new initiatives? If not, how might we attain them? What metrics will we use to measure success?

How do the company’s strategic planning and capital allocation processes align with a focus on the future and exponential change? Do they need to be revised to ensure they bring in key considerations of exponential change?

What’s the most promising edge of our business—one with the potential to scale into the new core of the company?

In the face of these changes, what is the cost of doing nothing or moving too slowly?

Zoom Out, Zoom In: Building Blocks for Successful Transformation

Besides asking the “right” questions of management, how can board members help a company flourish immediately and over time, engaging both management and the rank and file around a shared view of the future? The answer can lie in two essential building blocks for successful transformation: “zoom out, zoom in.”

—Zoom out: Board members can suggest that management develop a clear and compelling view of how a company and its business landscape will be different a decade or two down the road. Consider what the markets the business participates in today might look like in 10 or 20 years, and what shape it might need to take to continue to grow and create increasing value in that changed market.

—Zoom in: Board members also can encourage management to identify two or three promising concrete initiatives that can be taken in the next six to 12 months to accelerate movement toward the long-term (zoom-out) destination. Focus on near-term planning, identifying the highest-impact near-term initiatives that can test the assumptions of the long-term vision—and accelerate the path toward that vision. Consider how the business might tap into its broader business ecosystem to accelerate growth and change.

Tom Nassim

In the zoom out, zoom in approach, the near-term operating initiatives provide management with new information about the marketplace and needed capabilities, while generating feedback to refine the long-term view and support long-term transformation. That goal, in turn, helps management in selecting and shaping the next set of short-term initiatives. Such iterative processes accelerate learning, supporting institutional innovation and helping companies tap into the opportunities of tomorrow. Over time, the company develops new zoom-in initiatives, each of which further refines the larger, long-term trajectory identified in zoom-out planning.

Note too that short- and long-term goals are inextricably linked. Most scenario planning and development exercises explore potential futures, then management goes back to business as usual and nothing changes. In contrast, the zoom out/zoom in approach is practical rather than theoretical. Zoom-in planning is not over until management agrees on two to three new initiatives to implement. It requires the business to prioritize these initiatives, preventing the common tendency to spread resources too thinly across too many projects.

Other Ways Board Members Can Help Navigate Change

Following are six ways board members can serve their organizations in times of great change:

1. Own the big picture. The board is in a strong position to think big and focus on opportunity. It can take a longer view, helping executives identify a company’s highest priorities and steer toward them over time. Directors can also help management avoid taking a defensive posture in response to change, or clinging too tightly to the status quo.

2. Focus on the future. Management teams can be easily consumed by short-term pressures. But amid fundamental shifts, focusing on immediate results at the expense of the long view could be deadly. When that happens, the board can help build awareness of larger issues, ensuring that the organization thinks beyond the next quarter or next year.

3. Champion creativity. Directors can help liberate management to think more boldly and creatively about the future, framing change positively to help the company be the best it can be. That includes asking genuine questions and challenging orthodoxies when necessary.

4. Inspire boldness (but rein in impulsiveness). If management is reluctant to take any risks on new possibilities, directors can remind executives of the relationship between risk and reward. If executives are chasing every squirrel in the forest, the board can help focus their attention and energies on effective action.

5. Convey urgency (and discourage panic). Today, the biggest opportunities are more time sensitive than ever. Once goals are identified, the board can help drive confident, focused movement on time sensitive opportunities.

6. Foster learning and model important behaviors. To thrive in a time of great change, one should be both curious and well informed. Directors can serve the business by being a source of new ideas and information, modeling curiosity and helping corporate management reflect on, and learn from, recent initiatives. Board members are in the unique position to continue to ask challenging questions of management, and themselves.

As businesses continue to explore the new world generated by exponential change, board members—charged with advising, guiding and challenging company management—are in an ideal place to help focus the company on what really matters and its evolving role in the world.

—Excerpted from On the board’s agenda | US: The role of the board in an age of exponential change produced by John Hagel, co-chairman, Center for the Edge at Deloitte Services LP; Tom Nassim, ecosystems and exponentials leader at Deloitte Consulting LLP; Deborah DeHaas, vice chairman, chief inclusion officer, and national managing partner at the Center for Board Effectiveness at Deloitte; Henry Phillips, vice chairman, and national managing partner at the Center for Board Effectiveness at Deloitte & Touche LLP; Maureen Bujno, managing director, Center for Board Effectiveness at Deloitte LLP; Bob Lamm, independent senior advisor, Center for Board Effectiveness at Deloitte LLP; Debbie McCormack, managing director, Center for Board Effectiveness at Deloitte LLP; Krista Parsons, managing director, Center for Board Effectiveness at Deloitte & Touche LLP.

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